Singapore's property market had already started moderating when its government introduced fresh measures on August 30 to preempt the formation of a housing price bubble. Much like Hong Kong, the Lion City's residential sector has recovered swiftly from the credit crunch. But, unlike Hong Kong, the mass market has been leading the price gains in Singapore, with luxury property lagging behind. After some heady growth, a pause was perhaps inevitable. Market watchers say it is likely a healthy development. Prices in the mass market are now well above the city's previous price peak, set in 2007. Luxury prices, though, have yet to reach their high-water mark. 'What's happening now is that a lot of people are waiting and seeing,' says Chua Chor Hoon, head of Southeast Asia research at real estate adviser DTZ. 'There has been very high transaction volume, so a lot of people have gone into the market already.' About 14,000 properties changed hands last year, a heady rate for Singapore. So even before the government stepped in, there were signs that the market was beginning to flag, unable to keep up that pace. The measures introduced are familiar and were released later than some market watchers had expected. 'We believe the latest measures are motivated largely by the unabated rise in public housing prices,' says Chua Yang Liang, head of research for Singapore and Southeast Asia at Jones Lang LaSalle. The Housing Development Board (HDB) resale price index recorded what Jones Lang LaSalle calls a 'stunning high' of 4.1 per cent in the second quarter. The brokerage expects that pace of growth to slow to 1 to 2 per cent per quarter, with private property prices likely to budge ahead at a slightly faster pace of 2 to 3 per cent. The main steps came from the HDB, which has pledged to increase the supply of new flats and has shortened the completion of build-to-order units. It also disallowed concurrent ownership of HDB flats and private residential properties. Tim Murphy, founder of property investment and development company IP Global, says the government is 'really nervous about the HDB local market getting very overbought'. He thinks the changes, which more or less force people to sell all their other property to buy an HDB flat, will be effective. 'People don't like to break the rules here,' he says. The Urban Redevelopment Authority (URA) increased the holding period for the imposition of the seller's stamp duty from one to three years. For buyers with one or more outstanding home loans, the minimum cash payment has been increased from 5 per cent to 10 per cent of the home valuation. The URA also decreased the permissible loan-to-value ratio from 80 per cent to 70 per cent for people who already have a mortgage on another property. Those measures clearly affect investors and people looking to buy second properties. But they will have no impact on first-time buyers or those with high levels of cash and liquidity. 'Overall, we welcome this policy adjustment as the impact is more targeted at reducing speculative buying and not affecting occupier demand,' says Chua Yang Liang. 'This will promote a healthier investment climate for the market in the longer term.' Prices are still rising, but at a more sedate rate. The average resale price for leasehold suburban homes rose 2 per cent in the third quarter to S$660 (HK$3,950) per square foot, half the rate of increase in the previous quarter. But Chua notes that buyers have started to walk away from deposits on apartments, which are only about S$1,000 for the public housing that provides a home to 80 per cent of the city state's population. Even private property deposits tend to be small, at 1 per cent of the purchase price or sometimes a flat S$5,000. 'It's not a large amount, so if you expect prices to fall by more than that, then it makes sense to give up the deposit,' says Chua Chor Hoon. Luxury condominiums may still have room to grow, although price gains also slowed in the third quarter, moving up 1.6 per cent to S$2,630 per square foot. That leaves them still 6 per cent below the record price of S$2,800 per square foot set in the last three months of 2007. But luxury buyers appear to be the most leery about committing right now. That segment sees the most interest from overseas owners, who are either worried about the global economic recovery or keen to chase opportunities elsewhere in world. Domestic buyers in Singapore are seeing wages increase and a low rate of unemployment. They also have few investment opportunities other than the property and stock markets, with interest rates at historic lows. 'International buyers may be more cautious because they are taking a more global view,' Chua says. 'It could be because of the way Western economies are proceeding.' Money continues to come into Singapore, particularly from buyers from the mainland, Indonesia and Malaysia. With interest rates low, local demand is also likely to remain steady. 'The luxury end and the better end of the mass market will still grow,' Murphy says. 'I think we'll have a nice six months - if you've got the money, it's worth a punt.'